Opinion
In this сase we consider when the statute of limitations begins to run in a wrongful termination case in which the plaintiff has
I
Plaintiff William P. Romano was employed by defendant Rockwell International, Inc. (Rockwell) for 29 years. His last position with the company was as the director of human resources of Rockwell’s digital communications division. He generally received excellent pеrformance reviews. He was aware beginning in 1987, however, that he had displeased Gilbert Amelio, president of Rockwell’s communications systems division, in his handling of a personnel matter that occurred in the company’s London office. (The latter division apparently governed the operations of the digital communications division.)
On December 6, 1988, Rockwell’s communications systems vice-president, Gary Collins, Romano’s immediate superior, informed Romano that Amelio, who was Collins’s superior, desired that Romano’s employment be terminated. Collins explained that Amelio insisted that Romano accept a one-year teaching fellowship, followed by retirement. Collins proposed that under the circumstances, Romano agree to pursue a teaching fellowship until he reached 85 service points under the company retirement plan and thereupon became eligible for early retirement, and that he then retire. Collins asked Romano to contact him as soon as possible. When Romano suggested he needed legal counsel, Collins advised him not to be hasty, and to think about the proposal and give him a response as soon as possible. Romano understood in December 1988 that Rockwell intended to terminate his employment when he reached 85 points, which would occur May 31, 1991, and that the company was offering no option other than immediate termination. If he retired immediately, he would lose half the pension benefits he otherwise would receive in the event he achieved 85 service points under the company retirement plan.
Romano contacted Collins in January 1989 to work out details of the plan. A written plan for a teaching fellowship followed by retirement at 85 service points was developed, although it appears Romano never signed it. At
Romano’s replacement was not hired until December 5, 1989. In the meantime, Romano continued to serve at his post. Romano was 57 years of age, and his replacement 43. After the replacement arrived, Romano served at another post within the company until June 1, 1990, when the planned teaching fellowship began. Romano signed the necessary forms and retired from Rockwell on May 31, 1991. From December 6, 1988, until his retirement in 1991, Romano continued to receive his full salary, in addition to a sum intended to reflect bonus pay for which he was no longer eligible.
On September 18,1991, Romano filed a complaint with the Department of Fair Employment and Housing, alleging retaliatory termination and age discrimination. On September 21, 1991, the Department of Fair Employment and Housing issued a notice of case closure in the matter, recognizing Romano’s right to bring a civil action. On December 9, 1991, Romano filed a complaint in suрerior court, naming Rockwell and Gilbert Amelio, as well as various unnamed persons, as defendants. The complaint alleged (1) wrongful termination in violation of public policy, (2) retaliatory termination in violation of Government Code section 12940, subdivision (f), (3) age discrimination in violation of Government Code section 12941, (4) breach of implied contract, (5) breach of the implied covenant of good faith and fair dealing, and (6) intentional interference with contractual relations. (The last cause of action was alleged against defendant Amelio alone. Amelio was not a party to this appeal, nor was the sixth cause of action the subject of Rockwell’s motion to dismiss on statute of limitations grounds. Accordingly, we do not consider whether this cause of action was time-barred.)
Romano alleged that his employment was terminated because he had complained about and opposed Amelio’s unethical and illegal personnel practices (including nepotism and employment terminations in violation of state law and company policy), and also because of his age. He alleged additionally the existence of an implied contract not to terminate his employment absent good cause, asserting that good cause did not exist for the termination.
Defendant Rockwell sought summary judgment on the ground that all the claims alleged against it were time-barred under the applicable statutes of limitations. It asserted the following limitations periods applied. As to the
The trial court granted defendant’s motion for summary judgment on the ground that all claims were barred by the statutes of limitations invoked by Rockwell. At the hearing on the motion, the court declared that the applicable limitations periods began to run “at the time that the employer said, ‘we’re going to fire you.’ ”
The Court of Appeal reversed, concluding that the limitations period applicable to wrongful termination claims begins to run upon actual termination, rather than when the employee is informеd unequivocally that discharge is inevitable. The Court of Appeal observed that to require the employee to file a lawsuit while he or she still is employed would destroy any possibility that the employer might rescind the termination decision. It added that to hold the statute of limitations runs from the time of notification of termination would allow employers to create a situation in which employees would be likely to sleep on their claims, and ultimately lose them under the statute of limitations. Finally, the Court of Appeal pointed out that its decision would provide clarity and predictability to litigants, because the date of actual termination rarely would be subject to dispute.
II
A.
Summary judgment is granted only when the papers presented in support of the moving party establish that no issue of material fact exists to be tried and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c); Mann v. Cracchiolo (1985) 38 Cal.3d
The applicable statute of limitations does not begin to run until the cause of action accrues, that is, “ ‘until the party owning it is entitled to begin and prosecute an action thereon.’ ” (Spear v. California State Auto. Assn. (1992)
We must determine when each of plaintiff’s causes of action accrued for the purposes of the applicable statutes of limitations. Both parties ask us to decide this issue as a matter of law. It is undisputed that if plaintiff’s causes of action accrued on May 31, 1991, at the time of actual termination, his claims were timely filed. If, however, they accrued on December 6, 1988, when Rockwell notified him unequivocally that his employment would terminate when he reached 85 points under the retirement plan, his causes of action were not filed within the applicable limitations periods unless certain exceptions or tolling provisions apply.
As we declared in Jolly v. Eli Lilly & Co. (1988)
Rockwell asserts it established by undisputed evidence that the applicable statute of limitations had expired as to each claim before Romano filed his complaint. It makes this assertion on the basis of what it characterizes as undisputed evidence that plaintiff knew as of December 6, 1988, that Rockwell had determined that his employment would terminate as of June, 1991. Romano counters that the evidence was not undisputed. He points to his declaration that he did not intend to retire and hoped he would survive Amelio’s efforts to terminate him, and that he had survived similar reversals during his career with Rockwell.
In considering the question when plaintiff’s contract, statutory, and tort causes of action accrued, we take note of the policy underlying the applicable statutes of limitation. Civil statutes of limitations protect defendants from the necessity of defending stale claims and require plaintiffs to pursue their claims diligently. (Jolly v. Eli Lilly & Co., supra, 44 Cal.3d at pp. 1111-1112; Davies v. Krasna (1975)
B.
We turn first to plaintiff’s causes of action for breach of contract. As noted, plaintiff contends that Rockwell’s termination of his employment on May 31, 1991, violated the terms of an implied contract not to terminate his employment without good cause and breached the implied covenant of good faith and fair dealing implicit in the parties’ employment contract.
A cause of action for breach of contract does not accrue before the time of breach. (Spear v. California State Auto. Assn., supra,
In the event the promisor repudiates the contract before the time for his or her performance has arrived, the plaintiff has an election of remedies—he or she may “treat the repudiation as an anticipatory breach and immediately seek damages for breach of contract, thereby terminating the contractual relation between the parties, or he [or she] can treat the repudiation as an empty threat, wait until the time for performance arrives and exercise his [or her] remedies for actual breach if a breach does in fact occur at such time.” (Taylor v. Johnston supra,
Indeed, whether the breach is anticipatory or not, when there are ongoing contractual obligations the plaintiff may elect to rely on the contract despite a breach, and the statute of limitations does not begin to run until the plaintiff has elected to treat the breach as terminating the contract. (See 1 Witkin, Summary of Cal. Law, supra, Contracts, §§ 800-801, pp. 723-724.) In the context of successive breaches of a continuing contractual obligation, we have explained: “ ‘In such a contract, where the parties did not mutually
With respect to Romano’s claim that the termination of his employment constituted a breach of an alleged implied contract not to terminate employment without good cause, and of the implied covenant of good faith and fair dealing, it appears that the breach of this implied contract and covenant occurred at the time of termination. Under the facts alleged, Rockwell obligated itself not to terminate employment in the future without good cause, and a cause of action for breach accrued at the time of termination.
Alternatively, to the extent the notification of termination was an announcement of the employer’s intent not to abide in the future by its contractual obligations, this notification constituted an anticipatory repudiation, providing plaintiff the election of remedies described above and tolling the running of the statute of limitations. Indeed, the implied contract not to terminate without good cause, if established, would constitute an ongoing obligation, and the plaintiff would have the right to elect whether to rely on the contract despite an initial breach—even assuming the announcement of termination were regarded as constituting a present breach. Again, this circumstance would toll the running of the statute of limitations until termination, because Romano continued to perform and accept compensation until the time of actual termination, reflecting an election to treat the contract as still in effect.
Contrary to Rockwell’s contention, the Court of Appeal’s decision in Marketing West, Inc. v. Sanyo Fisher (USA) Corp. (1992)
The Court of Appeal in Marketing West, supra,
In Marketing West, supra,
As discussed above, even if Rockwell’s notification to Romano in December 1988 that his employment would be terminated on May 31, 1991, is treated as an anticipatory breach of contract, under established principles Romano could elect not to bring suit immediately, but instead await actual termination. Accordingly, we conclude that the statute of limitations applicable to the contract claims began to run at the time Romano’s employment actually was terminated, and that the causes of action for breach of contract were timely filed.
C.
We next consider Romano’s claims under the FEHA. He maintained that the termination of his employment violated Government Code section
In addition, Romano claimed the termination violated Government Code section 12941 because it was based on his age. That section provides in pertinent part: “It is an unlawful employment practice for an employer to refuse to hire or employ, or to discharge, dismiss, reduce, suspend, or demote, any individual over the age of 40 on the ground of age, except in cases where the law compels or provides for such action.” (Gov. Code, § 12941, subd. (a), italics added.)
Under the FEHA, the employee must exhaust the administrative remedy provided by the statute by filing a complaint with the Department of Fair Employment and Housing (Department) and must obtain from the Department a notice of right to sue in order to be entitled to file a civil action in court based on violations of the FEHA. (Gov. Code, §§ 12960, 12965, subd. (b); Rojo v. Kliger (1990)
As for the applicable limitation period, the FEHA provides that no complaint for any violation of its provisions may be filed with the Department “after the expiration of one year from the date upon which the alleged unlawful practice or refusal to cooperate occurred,” with an exception for delayed discovery not relevant here. (Gov. Code, § 12960, italics added.)
Government Code section 12940, subdivision (f), generally defines, as an unlawful employment practice, the “discharge” of an employee on the ground the employee has opposed illegal practices, as defined. Government Code section 12941 generally defines, as an unlawful employment practice, the “discharge” of an employee over the age of 40 years on the ground of age. In both instances, “discharge” on the forbidden grounds is an unlawful employment practice. None of the other discriminatory practices outlined by the relevant statutes are alleged here. Accordingly, in this case, the relevant
We interpret statutory language according to its usual and ordinary import, keeping in mind the apparent purpose of the statute. (Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987)
In the employment law context, the usual and ordinary meaning of the term “discharge” is to terminate employment. (See Black’s Law Diet. (6th ed. 1990) p. 463, col.2 [defining “discharge” in the employment context as: “To dismiss from employment; to terminate the employment of a person.”].) No other meaning is suggested by the context or history of the relevant sections, nor has any been suggested to us by Rockwell. It is evident that the purpose of the FEHA, to the extent it defines the term “unlawful employment practice” as including improper discharge, is to protect employees from loss of employment based on prohibited grounds. (See Gov. Code, §§ 12920, 12921.)
As noted above, by the terms of Government Code section 12960 the limitations period applicable to administrative claims begins to run “after” the unlawful employment practice has “occurred.” If the administrative complaint must be filed within one year “after” the unlawful practice—here, a discharge—“occurred,” then for the purpose of that complaint, the administrative cause of action must accrue and the statute of limitations must run from the time of actual termination. It would not run from the earlier date of notification of discharge, because on that date the unlawful practice (that is, the discharge) had not yet “occurred.”
Such an interpretation is consistent with the plain meaning of the statutory language. It is also consistent with the remedial purpose of the FEHA to safeguard the employee’s right to seek, obtain, and hold employment without experiencing discrimination. (See Gov. Code, §§ 12920, 12921; Robinson v. Fair Employment & Housing Com. (1992)
The FEHA itself requires that we interpret its terms liberally in order to accomplish the stated legislative purpose. (Gov. Code, § 12993, subd. (a); see also Robinson v. Fair Employment & Housing Com., supra,
Further, as the same court observed, such a rule does not impose an undue burden on employers by forcing them to defend stale claims. First, the period between notification and termination usually is short. (Ross, supra,
In addition, as the Court of Appeal pointed out below, such a rule has the obvious benefit of simplicity. Unlike notice of termination, which frequently is oral and may be conditional or equivocal, the date of actual termination is a date that in most cases is subject to little dispute.
Further, a holding that the statute of limitations on a claim under the FEHA runs from the time of notification of termination would promote premature and potentially destructive claims, in that the employee would be required to institute a complaint with the Department while he or she still was employed, thus seeking a remedy for a harm that had not yet occurred. In the present matter, for instance, such a rule would require that Romano commence his FEHA claim while he had at least another year and a half to work for Rockwell. As the Court of Appeal emphasized below, such a rule would reduce sharply any chance of conciliation between employer and employee and draw the Department into investigations that might have been
Other states also have reached the same conclusion in interpreting statutes of limitations applicable to claims under state laws prohibiting unlawful employment practices. In New Jersey, for example, the state Conscientious Employee Protection Act prohibits an employer from taking “retaliatory action” against an employee for, among other things, disclosing or refusing to participate in the employer’s illegal practices. Because the state statute defined the term “retaliatory action” to include “discharge,” which the reviewing court in turn interpreted to mean actual termination, the applicable statute of limitations ran from the date of discharge, rather than from the notification of impending discharge. (Keelan v. Bell Communications (App.Div. 1996)
Rockwell counters that related federal authority requires that we select the date of notification of termination as the event that commences the running of the statute of limitations. Rockwell relies upon the decisions of the United
In Ricks, supra,
In Chardon, supra,
As the Cоurt of Appeal in the present case pointed out, we are not bound by these decisions, because they interpret a federal statutory scheme not at issue here. In Ricks, supra,
In the nonacademic setting, notification of termination is not comparable to a denial of tenure—termination is not the inevitable result, because in the nonacademic setting termination of employment does not ensue inevitably once notification of termination has been given. Further, and more significantly, unlike the interpretation of federal law offered in Ricks, supra,
In addition, we question the reasoning of the high court’s decisions in this respect. To the extent the civil rights plaintiffs in those cases argued their employers wrongfully had repudiated an obligation imposed by law not to discharge employees on a prohibited ground, on basic contract principles (as discussed in the preceding section) the employees should not be required to bring a lawsuit before discharge. As Justice Brennan maintained in his dissent in Chardon, supra,
It is true, as Rockwell argues, that courts of this state have relied upon federal authority interpreting title VII in determining the meaning of analogous provisions of the FEHA. (See, e.g., Turner v. Anheuser-Busch, Inc. (1994)
Rockwell points out that some states have elected to follow Ricks, supra,
Rockwell urges that we follow the lead of the Court of Appeal in Regents of University of California v. Superior Court (1995)
In the Regents case, however, the plaintiff apparently did not argue that the terms of the FEHA required that the limitations period run from the date of termination. Rather, plaintiff apparently conceded that Ricks applied, but unsuccessfully tried to persuade the court that she had been subject to continuing violations of the FEHA—a circumstance that would cause the limitations period to run anew from each subsequent violation. Because the plaintiff framed her argument in this way, the court had no occasion to examine the questions of statutory interpretation discussed above. In sum, we are not persuaded by this authority that the limitations period under the
Finally, Rockwell argues that a rule providing that the statute of limitations begins to run from the date of actual termination represents poor public policy, because it would punish compassionate employers. Such a rule, it maintains, will discourage employers from providing advance notice or other severance benefits, such as those offered here by Rockwell, to cushion the economic blow of employment termination. It argues, too, that such a rule would be unfair because it would permit employees “to have their cake and eat it too”—to retain severance benefits and wait to sue until actual termination.
As we already have observed, the rule we propose to adopt does not burden employers unduly, because they have control over the date of notification of termination as well as the date of actual termination. Employers who recognize that the statute of limitations bеgins to run at the time of termination will have the ability to establish a record at the time of notification of discharge, demonstrating the propriety of the termination. Accordingly, the purpose of the statute of limitations, to protect against stale claims as to which evidence may be lost or memories faded, would be served adequately by the rule proposed. Nor do we believe it likely that such a rule will discourage employers from offering generous severance packages. We perceive minimal connection between severance benefits and the statute of limitations, apart from a hope on the part of the employer that the severance package will forestall any claim of wrongful termination. If the employer’s object in offering such a package is, as Rockwell suggests, to purchase exoneration from any claim of wrongful termination, such an object may be secured directly through an express agreement in which the employee waives аny potential claims. (See, e.g., Skrbina v. Fleming Companies (1996)
D.
Finally, we consider the statute of limitations question with regard to plaintiff’s tort cause of action. The statute of limitations does not
Plaintiff’s complaint alleged a claim of wrongful termination in violation of public policy. In recognizing such a tort claim, we have acknowledged that limits exist on an employer’s power of dismissal, even as to employees whose employment may be terminated at the will of either party. (Tameny v. Atlantic Richfield Co. (1980)
We have reaffirmed that “while an at-will employee may be terminated for no reason, or for an arbitrary or irrational reason, there can be no right to terminate for an unlawful reason or a purpose that contravenes fundamental public policy.” (Gantt v. Sentry Insurance (1992)
Because the cause of action recognized in Tameny, supra,
It is important to recall that, in the present matter, the interval between notification and actual termination of employment was two and a half years.
The Court of Appeal in Shoemaker v. Myers (1992)
In support of a contrary conclusion, defendants assert that in Regents, supra,
Because a cause of action for wrongful discharge in violation of public policy accrues at the time of termination of employment, we conclude that the statute of limitations applicable to such a cause of action begins to run at the time of actual termination.
III
For the foregoing reasons, the judgment of the Court of Appeal is affirmed.
Mosk, J., Baxter, J., Werdegar, J., Chin, J., and Brown, J., concurred.
I concur in the judgment and in the majority opinion with the understanding that the majority opinion’s discussion of Delaware State College v. Ricks (1980)
Notes
Indeed, Rockwell urges that these cases direct the outcome not only as to Romano’s FEHA claims, but also as to his tort and contract claims. No reason exists, it alleges, for a rule as to the nonstatutory causes of action different from that applied to the FEHA claims. Because we reject the claim as applied to the FEHA, we do not consider it in connection with the nonstatutory claims.
In view of this conclusion, we need not consider Romano’s claims of continuing violation of the FEHA, or his claim that the applicable limitations periods should be equitably tolled because of alleged misconduct on the part of Rockwell.